– Delivered 76% Net Sales Growth –
– Gained 260 Basis Points of Market Share –
– Raises Fiscal 2024 Outlook –
e.l.f. Beauty (NYSE: ELF) today announced results for the three
months ended June 30, 2023.
“We are off to a terrific start in our new fiscal year with net
sales growth of 76% and market share gains of 260 basis points in
Q1. This marks our 18th consecutive quarter of delivering both net
sales growth and market share gains. We are one of only five
publicly traded consumer companies out of 274 that has grown for 18
straight quarters and averaged at least 20% sales growth per
quarter over that period,” said Tarang Amin, e.l.f. Beauty's
Chairman and Chief Executive Officer. “As we look ahead, we believe
we are in the early innings of unlocking the full potential we see
for e.l.f. Beauty and are raising our fiscal 2024 outlook to
reflect our continued momentum.”
Three Months Ended June 30, 2023 Results
For the three months ended June 30, 2023, compared to the three
months ended June 30, 2022:
- Net sales increased 76% to $216.3 million, primarily
driven by strength in both our retailer and e-commerce
channels.
- Gross margin increased approximately 280 basis points to
71%, primarily driven by favorable FX impacts, margin accretive mix
and cost savings, lower inventory adjustments and improved
transportation costs, partially offset by the costs associated with
retailer activity and space expansion.
- Selling, general and administrative expenses
("SG&A") increased $30.4 million to $91.9 million, or 42%
of net sales. Adjusted SG&A (SG&A excluding the
items identified in the reconciliation table below) increased $29.4
million to $84.4 million, or 39% of net sales. The increase in
SG&A dollars was primarily due to an increase in marketing and
digital spend, operations costs, compensation and benefits, retail
fixturing and visual merchandising costs.
- Net income was $53.0 million on a GAAP basis.
Adjusted net income (net income excluding the items
identified in the reconciliation table below) was $62.9
million.
- Diluted earnings per share were $0.93 on a GAAP basis.
Adjusted diluted earnings per share (diluted earnings per
share calculated with adjusted net income excluding the items
identified in the reconciliation table below) were $1.10.
- Adjusted EBITDA (EBITDA excluding the items identified
in the reconciliation table below) was $74.3 million, or 34% of net
sales, up 135% year over year.
Balance Sheet
As of June 30, 2023, the Company had $142.5 million in cash and
cash equivalents and $59.6 million in long-term debt and finance
lease obligations, as compared to $72.2 million in cash and cash
equivalents and $89.7 million of long-term debt and finance lease
obligations as of June 30, 2022.
Updated Fiscal 2024 Outlook
The Company is providing the following updated outlook for
fiscal 2024. The updated outlook for fiscal 2024 reflects an
expected 37-39% year-over-year increase in net sales, as compared
to an expected 22-24% increase previously.
Updated Fiscal 2024
Outlook
Previous Fiscal 2024
Outlook
Net sales
$792-802 million
$705-720 million
Adjusted EBITDA
$171-174 million
$114.5-147.5 million
Adjusted effective tax rate
17-18%
21-22%
Adjusted net income
$125-127 million
$98.5-100.5 million
Adjusted diluted earnings per share
$2.19-2.22
$1.73-1.76
Fiscal year ending diluted shares
outstanding
57 million
57 million
Webcast Details
The Company will hold a webcast to discuss the results from its
first quarter fiscal 2024 today, August 1, 2023, at 4:30 p.m.
Eastern Time. The webcast will be broadcast live at
https://investor.elfbeauty.com/news-and-events/events. For those
unable to listen to the live broadcast, an archived version will be
available at the same location.
About e.l.f. Beauty
e.l.f. Beauty, Inc. builds brands designed to disrupt industry
norms, shape culture and connect communities through positivity,
inclusivity and accessibility. Our deep commitment to clean,
cruelty-free beauty at an incredible value has fueled the success
of our flagship brand e.l.f. Cosmetics since 2004 and driven our
portfolio expansion. Today, our multi-brand portfolio includes
e.l.f. Cosmetics, e.l.f. SKIN, pioneering clean-beauty brand Well
People and Keys Soulcare, a groundbreaking lifestyle beauty brand
created with Alicia Keys. Our family of brands is available online
and across leading beauty, mass market and specialty retailers in
the U.S., and has a growing international presence.
Learn more by visiting https://investor.elfbeauty.com.
Note Regarding non-GAAP Financial Measures
This press release includes references to non-GAAP measures,
including adjusted EBITDA, adjusted net income and adjusted diluted
earnings per share. The Company presents these non-GAAP measures
because its management uses them as supplemental measures in
assessing its operating performance, and believes they are helpful
to investors, securities analysts and other interested parties in
evaluating the Company’s performance. The non-GAAP measures
included in this press release are not measurements of financial
performance under GAAP and they should not be considered as
alternatives to measures of performance derived in accordance with
GAAP. In addition, these non-GAAP measures should not be construed
as an inference that the Company’s future results will be
unaffected by unusual or non-recurring items. These non-GAAP
measures have limitations as analytical tools, and you should not
consider such measures either in isolation or as substitutes for
analyzing the Company’s results as reported under GAAP. The
Company’s definitions and calculations of these non-GAAP measures
are not necessarily comparable to other similarly titled measures
used by other companies due to different methods of
calculation.
Adjusted EBITDA excludes expense or income related to
stock-based compensation, impairment of equity investment and other
non-cash and non-recurring items. Such other non-cash or
non-recurring items include amortization of internal-use software
costs related to cloud applications and cloud computing ERP
implementation costs. Adjusted SG&A excludes expense related to
stock-based compensation and other non-recurring items. Such other
non-recurring items includes other non-recurring cloud computing
ERP implementation costs. Adjusted effective tax rate is the tax
rate when excluding the pre-tax impact of expense or income related
to restructuring of operations, stock-based compensation, other
non-cash and non-recurring items, amortization of acquired
intangible assets, as well as the related tax impact for these
items, calculated utilizing the statutory rate for where the impact
was incurred. Adjusted net income excludes expense or income
related to stock-based compensation, other non-recurring items,
impairment of equity investment, amortization of acquired
intangible assets and the tax impact of the foregoing adjustments.
Such other non-recurring items, which include other non-recurring
cloud computing ERP implementation costs.
With respect to the Company’s expectations under “Updated Fiscal
2024 Outlook” above, the Company is not able to provide a
quantitative reconciliation of the adjusted EBITDA, adjusted net
income and adjusted diluted earnings per share guidance non-GAAP
measures to the corresponding net income and diluted earnings per
share GAAP measures without unreasonable efforts. The Company
cannot provide meaningful estimates of the non-recurring charges
and credits excluded from these non-GAAP measures due to the
forward-looking nature of these estimates and their inherent
variability and uncertainty. For the same reasons, the Company is
unable to address the probable significance of the unavailable
information.
Forward-looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws, including those
statements relating to the Company's outlook for fiscal 2024 under
“Updated Fiscal 2024 Outlook” above and those statements that we
believe we are in the early innings of unlocking the full potential
we see for e.l.f. Beauty. Although the Company believes that the
expectations reflected in the forward-looking statements are
reasonable, actual results and the timing of selected events may
differ materially from those expectations. Factors that could cause
actual results to differ materially from those in the forward
looking statements include, among other things, the risks and
uncertainties that are described in the Company's most recent
Annual Report on Form 10-K, as updated from time to time in the
Company's SEC filings, as well as the Company’s ability to
effectively compete with other beauty companies; the Company’s
ability to successfully introduce new products; the Company’s
ability to attract new retail customers and/or expand business with
its existing retail customers; the Company’s ability to optimize
shelf space at its key retail customers; the loss of any of the
Company’s key retail customers or if the general business
performance of its key retail customers declines; and the Company’s
ability to effectively manage its SG&A and other expenses.
Potential investors are urged to consider these factors carefully
in evaluating the forward-looking statements. These forward-looking
statements speak only as of the date hereof. Except as required by
law, the Company assumes no obligation to update or revise these
forward-looking statements for any reason, even if new information
becomes available in the future.
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of operations and comprehensive income
(unaudited)
(in thousands, except share
and per share data)
Three months ended June
30,
2023
2022
Net sales
$
216,339
$
122,601
Cost of sales
63,767
39,616
Gross profit
152,572
82,985
Selling, general and administrative
expenses
91,939
61,555
Operating income
60,633
21,430
Other income (expense), net
399
(1,663
)
Impairment of equity investment
(1,720
)
—
Interest income (expense), net
341
(663
)
Income before provision for income
taxes
59,653
19,104
Income tax provision
(6,676
)
(4,635
)
Net income
$
52,977
$
14,469
Comprehensive income
$
52,977
$
14,469
Net income per share:
Basic
$
0.98
$
0.28
Diluted
$
0.93
$
0.27
Weighted average shares outstanding:
Basic
53,938,136
51,707,160
Diluted
57,175,870
53,834,732
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated balance
sheets
(unaudited)
(in thousands, except share
and per share data)
June 30, 2023
March 31, 2023
June 30, 2022
Assets
Current assets:
Cash and cash equivalents
$
142,549
$
120,778
$
72,248
Accounts receivable, net
90,531
67,928
52,281
Inventory, net
98,053
81,323
70,339
Prepaid expenses and other current
assets
39,276
33,296
21,772
Total current assets
370,409
303,325
216,640
Property and equipment, net
7,581
7,874
9,339
Intangible assets, net
76,013
78,041
84,132
Goodwill
171,620
171,620
171,620
Investments
1,155
2,875
2,875
Other assets
31,103
31,866
29,251
Total assets
$
657,881
$
595,601
$
513,857
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and
capital lease obligations
$
5,431
$
5,575
$
5,793
Accounts payable
53,237
31,427
16,023
Accrued expenses and other current
liabilities
51,037
70,974
39,916
Total current liabilities
109,705
107,976
61,732
Long-term debt and finance lease
obligations
59,612
60,881
89,684
Deferred tax liabilities
5,855
3,742
13,538
Long-term operating lease obligations
10,137
11,201
14,637
Other long-term liabilities
870
784
817
Total liabilities
186,179
184,584
180,408
Stockholders' equity:
Common stock, par value of $0.01 per
share; 250,000,000 shares authorized as of June 30, 2023, March 31,
2023 and June 30, 2022; 54,417,579, 53,770,482 and 52,424,445
shares issued and outstanding as of June 30, 2023, March 31, 2023
and June 30, 2022, respectively
543
535
517
Additional paid-in capital
840,181
832,481
801,992
Accumulated deficit
(369,022
)
(421,999
)
(469,060
)
Total stockholders' equity
471,702
411,017
333,449
Total liabilities and stockholders'
equity
$
657,881
$
595,601
$
513,857
e.l.f. Beauty, Inc. and
subsidiaries
Condensed consolidated
statements of cash flows
(unaudited)
(in thousands)
Three months ended June
30,
2023
2022
Cash flows from operating
activities:
Net income
$
52,977
$
14,469
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
5,637
5,724
Stock-based compensation expense
7,200
6,542
Amortization of debt issuance costs and
discount on debt
75
91
Deferred income taxes
2,113
3,945
Impairment of equity investment
1,720
—
Other, net
71
21
Changes in operating assets and
liabilities:
Accounts receivable
(22,615
)
(6,727
)
Inventory
(16,729
)
14,158
Prepaid expenses and other assets
(8,094
)
(3,258
)
Accounts payable and accrued expenses
2,014
(3,442
)
Other liabilities
(1,015
)
(945
)
Net cash provided by operating
activities
23,354
30,578
Cash flows from investing
activities:
Purchase of property and equipment
(616
)
(241
)
Net cash used in investing activities
(616
)
(241
)
Cash flows from financing
activities:
Repayment of long-term debt
(1,250
)
(1,250
)
Cash received from issuance of common
stock
485
2
Other, net
(202
)
(194
)
Net cash used in financing activities
(967
)
(1,442
)
Net increase in cash and cash
equivalents
21,771
28,895
Cash and cash equivalents - beginning of
period
120,778
43,353
Cash and cash equivalents - end of
period
$
142,549
$
72,248
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP net
income to non-GAAP adjusted EBITDA
(unaudited)
(in thousands)
Three months ended June
30,
2023
2022
Net income
$
52,977
$
14,469
Interest income (expense), net
(341
)
663
Income tax provision
6,676
4,635
Depreciation and amortization
4,587
4,693
EBITDA
$
63,899
$
24,460
Stock-based compensation
7,200
6,542
Impairment of equity investment (a)
1,720
—
Other non-cash and non-recurring items
(b)
1,481
679
Adjusted EBITDA
$
74,300
$
31,681
(a) Represents an impairment of equity investment recorded
during the three months ended June 30, 2023. (b) Represents other
non-cash or non-recurring items, which include amortization of
internal-use software costs related to cloud applications and cloud
computing ERP implementation costs.
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP
SG&A to non-GAAP adjusted SG&A
(unaudited)
(in thousands)
Three months ended June
30,
2023
2022
Selling, general and administrative
expenses
$
91,939
$
61,555
Stock-based compensation
(7,223
)
(6,549
)
Other non-recurring items (a)
(352
)
—
Adjusted selling, general and
administrative expenses
$
84,364
$
55,006
(a) Represents other non-recurring cloud computing ERP
implementation costs.
e.l.f. Beauty, Inc. and
subsidiaries
Reconciliation of GAAP net
income to non-GAAP adjusted net income
(unaudited)
(in thousands, except share
and per share data)
Three months ended June
30,
2023
2022
Net income
$
52,977
$
14,469
Stock-based compensation
7,200
6,542
Other non-recurring items (a)
352
—
Impairment of equity investment (b)
1,720
—
Amortization of acquired intangible assets
(c)
2,028
2,031
Tax Impact (d)
(1,396
)
(1,917
)
Adjusted net income
$
62,881
$
21,125
Weighted average number of shares
outstanding – diluted
57,175,870
53,834,732
Adjusted diluted earnings per share
$
1.10
$
0.39
(a) Represents other non-recurring cloud computing ERP
implementation costs. (b) Represents an impairment of equity
investment recorded during the three months ended June 30, 2023.
(c) Represents amortization expense of acquired intangible assets
consisting of customer relationships and trademarks. (d) Represents
the tax impact of the above adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801615723/en/
Investors: KC Katten VP, Corporate Development & Investor
Relations, e.l.f. Beauty KKatten@elfbeauty.com
Media: Melinda Fried Head of Corporate Communications, e.l.f.
Beauty mfried@elfbeauty.com
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